Is the Impact of Labour Taxes on Unemployment asymmetric?

Tino Berger and Gerdie Everaert

Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium from Ghent University, Faculty of Economics and Business Administration

Abstract: This paper tests whether the impact of labour taxes on unemployment is symmetric with respect to increases and decreases in labour taxes. Using a panel of 16 OECD countries over the period 1970-2005, we estimate a panel unobserved component model to account for the fact that unemployment rates and labour taxes are non-stationary but not co integrated. We find a positive impact of tax increases in European and Nordic countries but no effect of decreasing labour taxes on the rate of unemployment. For Anglo-Saxon countries, no impact of labour taxes on unemployment is found.

Keywords: unemployment; labour taxes; asymmetry; unobserved component model (search for similar items in EconPapers)
JEL-codes: C15 C33 E24 (search for similar items in EconPapers)
Pages: 9 pages
Date: 2008-07
New Economics Papers: this item is included in nep-eec, nep-lab and nep-mac
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http://wps-feb.ugent.be/Papers/wp_08_523.pdf (application/pdf)

Related works:
Journal Article: IS THE IMPACT OF LABOR TAXES ON UNEMPLOYMENT ASYMMETRIC? (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:rug:rugwps:08/523

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